Analysis: Oracle’s Blockchain Move Is Critical

The recent news regarding Oracle and blockchain technology
is really important. In some ways, Oracle’s
embrace of the blockchain is more significant than IBM’s big bet on the
technology and Microsoft’s support for it.

While Oracle’s blockchain ambitions were socialized over the
summer via blog posts and low-key presentations, the official launch of the Oracle Blockchain Cloud
Service took place at the company’s annual Oracle OpenWorld conference on
October 2.

“Oracle Blockchain
Cloud Service provides enterprise-grade blockchain capabilities and is able to
accelerate innovation for on-premises [enterprise resource planning (ERP)] and
cloud-based [Software as a Service (SaaS) and Platform as a Service (PaaS)]
customers,” noted Amit Zavery, senior vice president of Oracle Cloud Platform.

Launched in 2011, Oracle’s cloud also offers a platform on
which third parties can develop their own applications, drawing on an array of
databases, service-oriented architecture (SOA), integration middleware and a
number of enterprise Java services (Oracle has acted as a key steward of the
open-source language following its 2010 acquisition of Sun Microsystems, which
created Java).

So, why is Oracle’s blockchain offering so important? After
all, on the face of it, Oracle’s service is “me too” in that it looks similar
to services already offered by IBM and also recently introduced by SAP, a key
competitor in the business application and database spaces. Both IBM’s and
SAP’s blockchain platforms are based on Hyperledger’s Fabric codebase (indeed,
IBM was a major code contributor and remains a key maintainer).

The “me too” analysis probably fits — not least as Oracle is marrying
blockchain technology with cloud technology, and it also sees clouds as a
channel to play in the artificial intelligence and Internet of Things (IoT) worlds.
Comparisons to IBM’s Watson IoT and SAP’s Leonardo are valid, even if there are
differentiation devils in the details.

The answer lies not in what Oracle has done but rather that
it has done it.

For sure, Oracle has a strong technology portfolio covering hardware, systems
and middleware software, and business applications. Moreover, anecdotal
evidence suggests that it has created a credible internal group of blockchain
technologists. It has also begun to file patents, including one this summer
titled “Accountability and Trust in Distributed Ledger Systems,” which
describes its own permissionless blockchain implementation, based on an open-source
offering from Tendermint.

As a generality, though, the company is not a first mover
and does not operate at the technology bleeding edge. True, it does have an
Oracle Labs operation, staffed no doubt by clever technology futurists (about
100 of them), but it’s not on the same scale as IBM’s 3,000-strong research
division.

Oracle tends to enter markets only when it believes they are ready for a
commercial offering. In short, Oracle is focused on making money from its products
and services, not on research and development for the sake of it or for some potential
future promise.

To underpin that assertion, one just has to consider how
Oracle approached the cloud marketplace. Cloud technology has recently become a
central component of its offerings, but that was not always the case. Back in 2008,
Oracle’s then-CEO Larry Ellison (he’s now executive chairman and CTO) referred
to the delivery mechanism as “complete gibberish” during a presentation where
he mocked how the
technology had gained much attention. At the time, cloud technology was certainly
being championed by many vendors, but corporations were cautious in their
approach to it. That attitude tangibly began to change a few years later, which
is when Oracle made its first positive announcements about cloud services.

Fast-forward to today and what Oracle’s move into blockchain
technology signals is that businesses are now ready to invest in the technology
on a significant scale. If it has indeed got the timing right, then many
blockchain companies, not just Oracle, are going to benefit greatly in 2018 as
corporate demand accelerates.

It’s clearly early days in Oracle’s embrace of blockchain technology, and it’s
probably too soon to determine how the technology will be incorporated into its
overall portfolio. That said, the company operates across several verticals —
financial services, healthcare, manufacturing and education — where blockchain
technology is showing merit. And Oracle is also a big player in cross-industry
businesses, such as supply chain and IoT.

At a more technical
level, it will be interesting to see whether Oracle leverages servers based on
its SPARC microprocessor within its cloud for blockchain apps (for the most
part, Oracle’s cloud runs servers based on Intel x86 chips). The latest SPARC
chips — based on a technology that came from Oracle’s Sun acquisition — are
equipped with cryptographic accelerators that could improve blockchain performance
significantly.

Crypto performance is certainly one of the selling points that IBM is pushing
for its cloud-based blockchain service, which leverages its own LinuxONE
servers. In fact, IBM reckons that 50 percent of the computing power required
for blockchains is sucked up by cryptographic processing.

It will also be interesting to see whether Oracle’s and SAP’s presence within
the Hyperledger Project changes a dynamic in which IBM currently has great
influence (understandably, since it puts a good deal of effort into various
Hyperledger initiatives).

Whether Oracle can (or chooses to) invest enough resources into its blockchain
initiatives to become a real enterprise blockchain alternative to IBM is yet to
be seen. But such a move, so long as it’s based on standards, would undoubtedly
be good news for the industry as a whole.

Big Blue versus Big Red in the blockchain space will hopefully be a fascinating
battle to observe.